DRASTIC action is being taken by Waveney District Council after an investigation into its finances revealed a potential overspend of almost £5m during the next year.

DRASTIC action is being taken by Waveney District Council after an investigation into its finances revealed a potential overspend of almost £5m during the next year.

Council leader Mark Bee has admitted things may have to get worse before they get better.

Job losses have not been ruled out, while the council has admitted that government-appointed officers could be sent in to take over if immediate action was not taken.

The Tory-run council insists a £4.6m overspend is a worst-case scenario but a range of immediate savings are being investigated and officers are seeking support from government departments.

Leader Mr Bee said the risks to the budget had been uncovered after a “forensic” examination of the authority's finances by its new management team, including chief executive Stephen Baker and director of resources Alan McFarlane.

“These risks could pose a genuine threat to this authority and the report leaves us in absolutely no doubt about the possible consequences,” added Mr Bee.

“But although some of the messages are stark, doing nothing would be worse and it is important that we now have the right people in place to effect the required changes.”

One of the areas causing most concern surrounds the possible overpayment of benefits by the council, which could lead to £3m of subsidies being paid back to the Department of Work and Pensions (DWP).

Negotiations with DWP bosses are under way, while the council is seeking permission from government officials to move large chunks of expenditure into another budget, which can be paid off over a longer period.

Internally, council officers have been tasked with identifying immediate savings while reviews have been launched into staffing, non-essential expenditure and fees and charges. Budget-monitoring reports will be presented every month to the cabinet and a new audit and risk-management committee will be set up.

Mr Bee added: “We have some momentum now and even if things must get worse before they get better, I share the determination of the chief executive to be open, clear and unequivocal about what needs to be done. We are identifying possible risk, not probability…”

Mr Bee said the £52.7m Waveney Campus project to build a new council and science headquarters would not be affected.

Mr Baker, also the chief executive of Suffolk Coastal District Council, was appointed earlier this year after Waveney was rocked by a series of damning reports from government-appointed auditors. He could not rule out job losses but said a review of staffing was already under way.

Mr Baker, who believes outside management of the council is unlikely, said: “We want to avoid an impact on frontline services but at the end of the day, we've got to balance the budget. But clearly we recognise what the community need and want.”

Waveney is already committed to an enabling agenda, where private operators will be brought in to run services in a bid to improve efficiency and quality.

Malcolm Cherry, the new leader of the council's opposition Labour group, said the financial report would be considered by the authority's overview and scrutiny committee, which he also chairs.

The council's cabinet was due to discuss the budget proposals on last night.